MAN CEO Sees No Signs Of Truck Market Rebound

MAN AG  Chief Executive Hakan Samuelsson Friday said that there was no sign of a truck market recovery, but added that the German truck maker and engineering company was well positioned to deal with the economic downturn due to its diversified structure.

"The business units diesel and turbo machines ... continue to have a more stable order intake," Samuelsson said in a prepared statement at the company's annual general meeting, adding that 2009 will be a "very difficult year."

Samuelsson reiterated that truck sales could fall about 50% in the first half of the year and said that reducing the company's inventory of currently around 10,000 vehicles was "high priority."

Demand at its diesel and turbo machines operations is seen "roughly on last year's level," Samuelsson said, adding that it was impossible to give an outlook for the full year at this time.

MAN, whose structure focuses on transport-related engineering, was prepared to deal with the sharp market downturn due to its strong capital base, he said.

"We won't have to renegotiate major new credit lines in the next two years," Samuelsson said.

The recession has hit global trade and construction hard, and demand for trucks has collapsed in recent months.

MAN's closely watched order intake, an important gauge for future business, fell 56% on the year in the fourth quarter last year to EUR1.96 billion. Some of MAN's peers saw even sharper declines.

MAN confirmed plans to push for cost savings at the commercial vehicles operations, its largest unit by far, by EUR500 million in 2009. Labor-related costs are expected to account for about half of the planned cost reduction.

Samuelsson said the measures to achieve these cost reductions were "fully on track."

MAN said it will add a position for personnel to its executive board and proposed to name Joerg Schwitalla as new personnel director.

Samuelsson said MAN was seeking renewed approval for share buybacks from its shareholders for the next 18 months, but added that the company currently doesn't have any plans to buy back shares. He said the approval would give MAN the option to react "if this is in the interest of the company and thus our shareholders."

MAN is set to change its legal form from a German Aktiengesellschaft, or AG, to Societas Europaea, or SE, in order to "better reflect the company's strong internationalization."

MAN's supervisory board is set to be reduced to 16 from 20 seats and add labor representatives from European operations outside Germany.

MAN said it was now generating 75% of revenue abroad and planned to foster its international expansion further, with a special focus on Brazil, Russia, India and China as it saw increasing need for transport and energy in these markets in the long term.

Last month, MAN finalized the acquisition of Volkswagen AG's (VOW.XE) Brazilian heavy truck operations in a deal worth about EUR1.18 billion.

Volkswagen holds a 29% stake in MAN, making it the company's biggest shareholder. It also owns a stake of around 69% in Swedish truck maker Scania AB (SCV-A.SK).

Volkswagen plans to forge a European truck alliance and benefit from synergies between its own commercial vehicles operations, MAN and Scania.

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